I’m investing in the best performing mutual fund schemes, but after I invest, the fund’s performance starts degrading. What do I do?
This is the story with each one of us. When NAV is low, FEAR factor surrounds us (what to do now?) & when NAV is high, we have GREED (to hold on or to buy more?).
It’s like planting a tree, once the seed is planted, we virtually see it every day, to check on the growth. First few days/ weeks are very exciting, when we see a small bud, leaves sprouting; but after few weeks or a month, it becomes frustrating, as growth is small & we want to see a big tree right away. Whereas it will take years, before the tree is fully formed, will bear flowers & fruits, and above all it must withstand harsh weather& other factors.
Your returns or growth in a Mutual Fund, is an outcome of multiple years of holding period. And in this period, market will behave in both directions, i.e. market may come down resulting in lower NAV or go-up in one swing, with a higher NAV.
Prudent advice; is to just ignore the market swings & stay-put, and only bother about the holding period. No one can control markets, but one can control to STAY PUT 😉.
You are not investing to time the market, but investing for an objective, which has a duration (time-line); for instance, your kid’s education, which is 10 years from now. Therefore, just STAY PUT.